Johnson Associates in the news
Johnson said he expected equities “to be up for the rest of the year,” but not on par with the “euphoric trading” of 2007 and 2008.
“This is not your grandma’s trading. This is a more constrained, client-driven trading,” Johnson said. “We won’t see perhaps the profits we saw before the crisis.”
“The mantra is hedge funds should make more money in volatile markets, that’s always been their elixir,” Johnson said. “That’s not as automatic as it once was.”
Johnson Associates bases bonus estimates on first-quarter results and conversations with clients. The forecasts often change throughout the year.
“They’re just going to go to the salary they wanted to do in the first place,” said Alan Johnson, a financial compensation expert who runs the consulting firm Johnson & Associates. “The only reason you would change it because of the tax law is because you never believed in bonuses.”
Similarly, Alan Johnson, managing director and founder at Johnson & Associates, suggests these pay disclosures may be only the beginning. For example, consider the gender pay gap information that companies are being required to disclose in the U.K. this year, he says.
“I think we’re going to have ratios like this in different states in the U.S. that people are going to be required to disclose. Investors are asking about some of these things,” Johnson says.
Firms are demonstrating willingness to give hefty pay boosts to particularly talented young tech experts. However, “these big jumps are still cheap relative to the much bigger compensation packages required to retain more-senior employees,” said Johnson Associates managing director Francine McKenzie in the report.
“Even with the recent market volatility, we continue to forecast a positive outlook for 2018 asset management compensation, which would build on the significant pay levels delivered in 2017,” she told Money Management Executive, while noting the trajectory could change if there is a sustained and deep downturn.
“With increased market and sector volatility, we are likely to see more outliers, depending on strategy and focus, than we did in 2017, where many boats rose in tandem with the market,” she says. “Those in the industry that would especially benefit from volatility would be the large brokers whose advice and guidance during turbulence is often sought.”
Overall, she adds, despite the challenges, “large asset management firms are well- managed, positioned and structured, and will continue to offer real career and compensation opportunities.”
Boards have oversight of retirement plans, but not at a deep level. They generally leave it to management, says Alan Johnson, managing director of compensation consulting firm Johnson Associates. That may be one reason why participation is low at many companies. “I think most companies have looked at 401(k)s as kind of a hygiene factor. You’ve got to have one and it needs to be reasonably competitive,” Johnson adds. “but if you’re well beyond the (minimum), it may not be a good use of (corporate) money.”
“Getting zero bonuses was unheard of a couple years ago, but it happens today,” said Alan Johnson, head of compensation consulting firm Johnson Associates.
“I expect that there are people who will get no bonus” this season, he added.
But compensation experts say the change in tax law is not likely to reverse years of upward pressure on executive pay. If anything, companies are likely to make such pay less dependent on performance-based bonuses and give executives a higher salary, they say.
“Some people will hope this reduces executive pay; I don’t think it will,” said Alan Johnson, managing director of pay consultant Johnson Associates.
“The impact of getting rid of the deduction of state and local taxes is a tipping point for New York, Boston and California as people look at where to create jobs and put people,” Johnson says. “The exodus of people [from expensive cities in states with high taxes] will accelerate, and that’s going to have a big impact on financial services.”
Alan Johnson, the founder of compensation consulting firm Johnson Associates, says that pay is typically 15%-20% less in locations outside of New York where banks are moving jobs. However, the lower cost of living often makes up the difference.